Other sole-proprietor and company rules: business tax, unregistered self-employment, cash withdrawals, upkeep cost, dormancy

Beyond income tax, consumption tax and municipal tax, sole proprietors face an extra tax many discover only later: 個人事業税 (jigyozei). The tax office sends a questionnaire (個人の事業内容に関する明細書) asking about the number of clients, who supplies the workplace or equipment, and who assigns tasks. The more the answers resemble disguised employment rather than an independent business — no say over how the work is done, paid by time, no own office, no employees, no ability to subcontract, only one client — the lower the chance of being subject to this tax. Separately, income earned without formally registering as a sole proprietor is still taxed as ordinary personal income: all income after business expenses is subject to normal income tax, just without the special benefits available to a registered sole proprietor, such as the blue-form declaration; registration is not legally required, but declaring income and paying tax always is. On the company side, withdrawing cash from a company bank account without documented justification is formally treated as personal use of company funds; in one case a tax audit required an extra 50,000 yen payment, and in another an interest rate of around 1% was mentioned (unconfirmed). Legal ways to take money out are salary or dividends; after-the-fact director bonuses tied to actual profit (as opposed to fixed bonuses declared in advance) are not practiced and are effectively prohibited. Typical company maintenance costs, per chat experience, run noticeably higher than a minimal-contribution sole proprietorship: roughly 70,000 yen a month for social insurance, 35,000-40,000 yen a month for an auditor, about 200,000 yen for the annual accountant's report, plus office rent, local neighborhood association dues, utilities, and translation services when needed. Finally, a company can be kept dormant — paying the owner no salary and running minimal activity — without legal problems; this can serve as a temporary strategy during a pause in business, but it does not remove the obligation to file tax returns and local tax reports, including a zero return. Source: https://shimada-cpta.com/jigyozei-otazune/ — Breakdown of the jigyozei (個人事業税) tax and the tax office questionnaire, from an accounting firm's site..